Thursday, December 24, 2015

by Gary SnyderRep. Bennie Thompson
said it is “critical” for the Red Cross to act quickly in response to problems
reported by ProPublica. The key congressman who sits on a committee that
oversees the American Red Cross is pressing the group’s chief executive for
information about how layoffs and other cuts have affected its ability to
respond to disasters. In asix-page lettersent Wednesday, Rep. Bennie Thompson, D-Miss, cites
ProPublica’s recent reportingon Red Cross Chief Executive Gail McGovern as well as
previous coverage by us and NPR on the charity’s responses toSuperstorm Sandyand the 2010 Haiti earthquake. “Given the Red Cross’ important role in responding
to both domestic and international disasters, it is critical that it acts
quickly to address the serious problems ProPublica, NPR, and the GAO uncovered
this year,” Thompson wrote, referring to a Government Accountability Office
report that found the charity wouldbenefit from more scrutinyfrom the federal government. Thompson has
requested copies of any internal Red Cross after-action reports assessing the
group’s responses to the recent Valley Fire in Northern California and
disasters in West Virginia, which have been the subject oflocalcriticism. For major disasters, the Red Cross typically produces after-action reports but
does not release them to the public. On the international front, Thompson is requesting more
information about what the Red Cross has done in Nepal following the April
earthquake. McGovern recently wrote a blog poststating
that the charity “played a leading role in supporting relief operations in
Nepal.”Thompson has asked for details on how much money the Red Cross raised
for Nepal and what it has been spent on. “How did the lessons learnedfrom the Red Cross’ response to Haiti inform its activities
in Nepal?” it continues.(ProPublica)Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however.
Cites in various media:
Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com,
Nonprofits: On the Brink (2006)
Silence: The Impending Threat to the Charitable Sector (2011)

Friday, December 18, 2015

New York State
attorney general reached a settlement to permanently close a child leukemia
charity accused of fraud.

The attorney general
will also recover $380,000 dollars from the foundation, most of which will be directed
to charities helping children with leukemia. The founder forfeited claims to an
additional $612,844 in back pay, in addition to a claim to a lifetime pension
and other benefits.

The foundation
collected $9.7 million from 2009 to 2013. Some 80 percent of the money went to
telemarketing and direct-mail fundraising campaigns, and only $57,451 was paid
out in direct cash assistance to leukemia patients.

The foundation also fraudulently
claimed to have a bone marrow registry and cancer research building in Israel.

The president of the foundation,
until his resignation in 2010, had been convicted of bank fraud in 1999. The
foundation’s accountant took over as president, but the original founder and
president continued to run things. He established the foundation in 1991 after
losing a son to leukemia. He paid himself $595,000 in salary and $600,000 in
deferred compensation from 2009 to 2013, and a lifetime pension of more than
$100,000 a year.

Thursday, December 17, 2015

A former bookkeeper for the National Veterans
Service Fund in Darien (CT) has pleaded guilty to charges related to her
stealing about $800,000 from the organization.

She pleaded guilty to wire fraud
and tax evasion offenses for her embezzlement.

The NVSF
provides social services and medical assistance to veterans from the Vietnam
and Persian Gulf wars, as well as their families.

Police
said she started at NVSF in 2008 and was responsible for payroll and
disbursement of funds to clients. She is accused of writing unauthorized checks
to herself and family members for personal expenses, though she tried to cover
it up by claiming the money was given to veterans in need.

The tax
evasion charge is due to her not reporting the embezzled money on her federal
tax returns, resulting in a federal tax loss of more than $270,000.

Tuesday, December 15, 2015

Under Gail McGovern, the Red Cross has slashed
its payroll by more than a third, eliminating thousands of jobs and closing
hundreds of local chapters. Many veteran volunteers, who do the vital work of
responding to local fires and floods have also left, alienated by what many
perceive as an increasingly rigid, centralized management structure.

In 2013, losses were
mounting. The organization ran a $70 million deficit that fiscal year and has been in
the red ever since. Internal projections say the charity will not break even
before 2017. But such projections have not served the organization well. All of
this despite a projectedbillion-dollar jump in revenue, powered by expanded
fundraising and growing profits from fees paid for CPR classes, swimming
lessons and training materials.

Special government
oversight of the charity’s blood-banking operation, which collects and sells
blood to hospitals has cost the organization tens of millions of dollars in
fines. A federal judge ended two decades of such oversight. The blood
unit, which is the Red Cross’ largest division, is a $100 million drag on the
charity’s bottom line, in part because changes in medicine have sharply reduced
the demand for blood. In its statement, the Red Cross pointed to those changes
as the reason for the charity’s recent deficits.

When McGovern was
hired as CEO, there were over 700 Red Cross chapters across the country. Today,
there around 250, though some former chapter offices stayed open even as they
were folded into other chapters. The Red Cross declined to say how many offices
it closed.

The number of paid
employees fell from around 36,000 to around 23,000. Amid layoffs, bonuses given
have raised eyebrows within the Red Cross, a former headquarters official said.

An internal survey
obtained by ProPublica found volunteers around the country had a satisfaction
rate of 32 percent this year — down 20 points from last year.

Between 2001 and 2008, the
organization went through six interim or permanent leaders, several of whom
departed amid allegations of mismanagement and misuse of donated funds.

In 2007, the Red Cross board, led by
Bonnie McElveen-Hunter — a wealthy Republican donor appointed by President
George W. Bush in 2004 — recruited Bush administration official Mark Everson as
the CEO who would bring stability to the organization. Six months later, the
board forced Everson out after the affair with his subordinate, touching off
yet another round of embarrassing headlines.

Friday, December 11, 2015

Just
last month, Nonprofit Imperative had
a story about a priest in Michigan that admitted to stealing almost $600,000
and was sentenced to 27 months in prison.

Now another Catholic priest is in
the news having swiped collection-plate donationsto pay for drug-fueled sex romps, “illicit and prescription drugs” a
$264,000 home in Brick, NJ, and paid $1,075.50 a month for a East Harlem
apartment, court papers say.

In addition to skimming $20 bills from the
collection plate there, Rev. Peter Miqueli ripped off money raised to buy a new
pipe organ at his former church.

He also put his sex friend in charge
of the Cabrini thrift shop, where Miqueli “misappropriated and diverted money ... for his own
personal use” and destroyed financial records to cover up the theft, the suit
says.

The best guess is that he took $2
million from two parishes.

The suit, which was filed in
Manhattan Supreme Court also charges that the Archdiocese of New York and
Cardinal Timothy Dolan knew about Miqueli’s “illegal scheme” and did nothing
for a period of nine years. (nypost.com)

About Me

Gary Snyder is the author, most recently, of the groundbreaking expose on the charitable sector, Silence: The Impending Threat to the Charitable Sector as well as the often-cited guide on best practices and key concepts, Nonprofits: On
the Brink.

He is the publisher of a
twice-monthly newsletter, Nonprofit Imperative that gives an update on the current status of the
charitable sector.

Snyder is often quoted and frequent contributor to the blog of the National
Committee for Responsive Philanthropy. Snyder twiceauthored the Governance Chapter of the Michigan
Nonprofit Management Manual (4th and 5th editions).

He is a speaker on ethics,
financial and governance matters of the sector. For almost a decade, Snyder is frequently
consulted by Congress and has been quoted in print, broadcast and online media
outlets.